World News

Australia eases rules on raising capital amid coronavirus outbreak

(Reuters) – Australia’s corporate regulator has temporarily relaxed some rules to make it easier for listed companies to raise capital because of the coronavirus pandemic, it said on Tuesday.

The news comes just as Australian companies have kicked off capital raisings to boost their balance sheets, as the outbreak forces them to burn through cash while businesses operate at reduced capacity.

The Australian Securities and Investments Commission (ASIC) said it would allow companies to issue certain ‘low-doc’ offers, such as rights offers, placements and share purchase plans, even if they fall short of usual requirements.

A ‘low-doc’ capital raising regime that exempts a firm from issuing a prospectus for a capital-raising is normally not available to a company whose shares have been suspended from trading for more than five days in the prior 12 months.

Such companies would normally need to prepare a prospectus or apply to the ASIC for individual relief, which can be costly and involve delay, the regulator said.

But now, a listed company whose shares have been suspended from trading for a total of up to 10 days in the previous 12-month period can forgo the individual application.

“The regulator is doing all that it can to help companies raise capital but ultimately companies that are in this position may still find it hard to raise the money from the market,” said a capital markets lawyer, who declined to be identified because the person was not authorized to talk to the media.

“Some of these companies might not be able to raise money from the public, they might have to get capital from private equity or other investors on terms which might not be as palatable to them as a public capital raising.”

On Monday, online travel booking company Webjet Ltd <WEB.AX> requested the stock exchange to extend its suspension for five days as it works on a capital raising plan. The stock has been suspended since March 23.

Affinity Energy and Health Ltd <AEB.AX> and broadcaster Swift Media <SW1.AX> have also requested suspensions on Tuesday as they work on capital raising plans.

(Reporting by Rashmi Ashok in Bengaluru and Paulina Duran in Sydney; Editing by Clarence Fernandez and Himani Sarkar)